Christine Lagarde Briefs on IMF Spring Meeting

On April 10, Christine Lagarde, managing director of the International Monetary Fund (IMF), met with the press at George Washington University to conduct a briefing on the Spring Meeting of the IMF and World Bank. The C-SPAN narrator described the meeting as being on the subject of aid to the Ukraine, which Lagarde estimated at $14 billion to $18 billion, but the press conference was mostly a standard briefing on the outlook for the world economy, and Ukraine was one of the important topics covered.

Fortunately, the demonstrators who often accompany IMF meetings seem to have missed this one. It might be mentioned incidentally that the bankers who show up at these meetings in order to entertain the finance ministers and central bankers tend to party very hard, all in the interest of advancing the cause of economic growth, especially for the poorest countries.

U.S. Treasury Secretary Jack Lew also held a press conference nearly simultaneously with this one that will be discussed in the next article in this series.

In her remarks, Lagarde briefly surveyed the outlook for world economic growth, discussed the measures that need to be taken in order to improve performance and then responded to questions from the press. The official estimate for growth of the world economy is 3.6 percent for 2014 and 3.9 percent, with emerging and developing economies leading the way at a somewhat slower rate than recent years of 5 percent for 2014 and 5.4 percent for 2015. The pace of growth in the advanced economies has strengthened and is estimated at 2.3 percent for 2014 and 2015.

Lagarde summed up these figures as evidence that the world economy is "turning the corner, but the recovery is too weak and too slow," "not quite good enough" and the world economy needs to do better, because there are 200 million people in the world who are unemployed.

Lagarde emphasized that the theme of the meetings was growth, and noted that the IMF has developed a document called the Global Policy Agenda, which calls for strenuous efforts to overcome a trio of hurdles — low inflation, slow growth and the need for structural reform. The most prominent action in dealing with low inflation is the reiteration by the European Central Bank that it will employ unconventional means as needed to boost inflation.

With respect to the promotion of growth, Lagarde called for the advanced economies to get fiscal and monetary policies right. In the past she has expressed this in terms of fiscal policies that are sustainable over the long run, but not so stringent as to impair the recovery, and the return of monetary policy to normal, so that extraordinary measure would no longer be needed to support the economy. She added that to achieve these goals would require good timing, execution and communication.

Among the structural issues Lagarde mentioned are the need for global financial reform; continued financial vulnerabilities, including hot spots of overlending and high corporate debt in emerging countries; and higher geopolitical risk.

She urged a vigorous effort to pursue the goals agreed to by the G-20 in Sydney, which she said hold the promise of improving world economic growth by 2 percent.

Lagarde concluded her remarks by urging the U.S. Congress to enact legislation to meet its commitment to reform of IMF quota and governance as agreed to in 2010.

On April 10 Christine Lagarde, managing director of the International Monetary Fund (IMF), met with the press at George Washington University to conduct a briefing on the Spring Meeting of the IMF and World Bank.